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Is President Barack Obama responsible for U.S. oil production rise?

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Posted on January 27, 2012 at 6:40 am by Dan X. McGraw

President Barack Obama has gotten an earful from Republicans and energy industry officials for claiming his administration has helped to spur a rise in oil and natural gas production.

So who’s right?

Robert Rapier at the ConsumerEnergyReport.com broke down oil production under the presidential tenures of George Bush and Obama. Here is what he came up with:

For industry folks, it isn’t exactly what you imagine, but Rapier says the graph doesn’t paint the clearest picture of who is responsible for driving production of oil and natural gas.

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“The reason that oil production has risen under President Obama is due to events that happened years earlier. In this case, it wasn’t some grand initiative that President Bush passed, rather it was years of steadily increasing oil prices that caused oil companies to approve a number of new projects that had marginal economics at lower oil prices. But these projects take some years to build, and as in the case of the Alaska Pipeline, decisions that were made (four to six) years earlier benefited President Obama with increased domestic oil production.”

Rapier dives into a similar situation between former presidents Jimmy Carter and Richard Nixon.

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If Obama Loses, It Will Be Because Of This One Chart

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James Pethokoukis, American Enterprise Institute

In his State of the Union response the other night, Indiana Gov. Mitch Daniels neatly summed up Mitt Romney’s (who has a roughly 90 percent chance of being the GOP nominee according to Intrade) economic case against President Barack Obama: “The president did not cause the economic and fiscal crises that continue in America tonight, but he was elected on a promise to fix them, and he cannot claim that the last three years have made things anything but worse.”

In other words, the Obama Recovery stinks. Even if today’s GDP report — for the fourth quarter of 2011 — shows 3 percent growth or better, it would be just the fourth time that has happened since the economy began turning up in June 2009: 3.8 percent in the fourth quarter of 2009, 3.9 percent in the first quarter of 2010, and 3.8 percent in the second quarter of 2010. But no 3 percent-plus quarters since then.

The first nine quarters of the Reagan Recovery, by contrast, looked like this:  5.1 percent, 9.3 percent, 8.1 percent, 8.5 percent, 8.0 percent,  7.1 percent, 3.9 percent, 3.3 percent, 3.8, percent, 3.4 percent. In fact, the Reagan Boom went from the first quarter of 1983 until the second quarter of 1986 without notching a sub-3 percent GDP quarter.

So while the Reagan Recovery quickly made up for lost years of growth, not so much for the Obama Recovery, as this chart in today’s Wall Street Journal makes clear:

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And few economists are expecting the Obama Recovery to take off anytime soon. The IMF predicts just 1.8 percent growth for 2012 (and that’s assuming no EU sovereign debt meltdown). And the Federal Reserve sees growth in the 2.2 percent to 2.7 percent range with unemployment around 8.2 percent to 8.5 percent. Ugh!

The WSJ offers two explanations for the anemic rebound:

Economists say the nature of the recession helps explain the slow recovery. Aftershocks from the financial crisis have left banks reluctant to lend, making it hard for companies, and especially start-ups, to get access to capital. The housing market, which has historically helped lead the economy out of recession, remains deeply depressed.

Many business leaders say they are also being held back by policy-related uncertainty, everything from the threat of new regulations and higher taxes to the fear that political gridlock could hamper the government’s ability to respond to a new crisis. Recent economic research has given some weight to those complaints. A study by a trio of academic economists found that policy uncertainty has risen in recent years, and that periods of uncertainty have in the past corresponded with rising unemployment and slowing growth.

Whichever explanation holds more weight with voters may go a long way toward deciding who’ll be America’s next president.

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USA: Fight for Nantucket Sound Continues

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You could almost detect the gritty glee in Audra Parker’s statement when, as president of the Alliance to Protect Nantucket Sound, she said: “This represents a major setback for an already struggling project,” regarding the recent appeals court decision — the alliance filed the appeal — that further delays the implementation of the country’s first offshore wind farm, Cape Wind.

Like Ali and Frazier, this represents another round in the epic battle of Sound vs. Wind.

The decision rendered on Oct. 28 by the U.S. Court of Appeals for the District of Columbia (former members include John Roberts and Ruth Bader Ginsburg) is important because the court is considered the second most important behind the Supreme Court.

Principally, because of its “often exclusive jurisdiction” to hear “challenges to … environmental protections” issued by federal agencies, such as the Federal Aviation Administration, Cape Wind is running out of legal options. The FAA is now required to further review the project — it has reviewed the matter for eight years — to determine (as it has previously done) that the turbines pose no threat to aviation.

With aerial anticipation, the alliance is sensing a final knock out.

Citizen advocate groups, single-issue social artifacts, like the alliance, are typically created to profess opposition to, raise awareness of, and are ultimately organized for, elimination of public projects (ironically, created for public benefit) or societal ills, of which, locally, Cape Wind is public enemy No. 1.

For the alliance and its neighboring cousin, Windwise-Cape Cod, among others, rejection is often an easier form of political expression than proposition. The statements they make and alternatives they offer are overly simplistic and are sometimes consumed with more emotion and hyperbole than intelligence and should be challenged as much as the assumptions offered by Cape Wind and other wind projects.

Sheila K. Bowen, president of Windwise, recently wrote of industrial turbines that “they are not environmentally responsible.” Does any thoughtful person, who is serious about energy policy, especially “green” or “clean” energy, really believe that? With that line of reasoning one should come to the same conclusion that the use of combustion engines in school buses, emitting carbon monoxide and hydrocarbons, is also not “environmentally responsible.” Stop the buses!

The alliance says “other green initiatives like energy efficiency and alternative power sources, including land-based wind and hydro, can provide power and save the environment at half the cost of Cape Wind.” Preposterous. Do they factor into their calculus that significant upgrades (read, cost) need to be made to transmission lines from an already taxed grid, from places like Maine and Vermont?

Further still, they also support land-based wind projects “when appropriately sited” and in the “general interests of the local community.”

Additionally, “land-based wind is often more favorable than offshore wind due to better economics, less risk and the existence of a regulatory process.” Translation: not happening. Ask the residents of Brewster, Bourne and Falmouth if they believe there are favorable, appropriate sites in their towns.

Should Cape Wind proceed, the alliance believes, citing what should be a questionable Beacon Hill Institute study, that “a loss in property values of $1.35 billion” can be expected and “a reduction in tourist spending of $57 million to $123 million” should be feared.

Finally, the alliance touts “upgrades to existing power plants” (will Parker agree to pay more for the cost?), “deep-water sites” (think Deepwater Horizon), “management of consumer demand patterns through peak-load sharing or shifting” (elaborate how) and “renewable options that can produce constant, reliable generation with lower transmission costs” (what are the options?).

The reality is that there are few options. But Cape Wind, perhaps not economically proficient at the moment, is a viable one. Solar energy provides a cost of nearly double that of offshore wind energy and recent bankruptcies of Evergreen and Solyndra — financed with taxpayer dollars at the local and national levels — is rarely mentioned by those opposed to Cape Wind as a sensible option. Nuclear energy, in the wake of the Fukushima Daiichi troubles, does not seem politically expedient either.

So, opponents of Cape Wind, provide better, more detailed options for powering our homes, gadgets and lifestyles, considering our increasing, insatiable demand.

As Sound and Wind take to their respective corners, it is not known when the next round will be, but it is certain that the match, like all fights, will be determined by judges. Sadly, that is a reflection of our flawed and failed energy policies.

James P. Freeman of Orleans is a financial services professional.

By James Freeman (capecodonline)

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